An Empirical Analysis of Land Use Regulation Determinants

To deepen the understanding of the economics of land regulation and its determinants we test several alternative explanations of the sources of municipal variation on the stringency of the regulatory environment in Argentina. Land use regulation is measured by a new aggregate index of local regulatory restrictiveness—the CIPUV Land Policy Index (CILP)—which comprises diverse sub-indexes that summarize information on the different aspects of the local regulatory environment. We use less-conventional sources of empirical data on regulation, such as a broad database of land cover metrics derived from satellite images for over a hundred municipalities that form part of metropolitan areas of Argentina, and link these metrics with National Population’s Census Data to construct our explanatory variables. Our results, based on OLS and IV estimations suggest weak or no support for the most common hypotheses of the determinants of land use regulation, namely those based on correction of externalities or reflecting the wishes of the majority of (formal) landowners. Our findings might provide support to the exclusionary hypothesis which states that heterogeneous municipalities with higher rates of both educational attainment and share of disadvantaged population tend to practice more restrictive residential zoning. We find that, as population gets denser the stringency of residential land use regulation is less related to welfare economics considerations. Neither is it affected by land-based interests but rather by mild exclusionary aims. When spatially tested, we find some interesting correlations as we analyze the exclusionary hypothesis: jurisdictions in Buenos Aires where the share of families with unsatisfied basic needs is higher are systematically surrounded by municipalities with stringent policies regarding infrastructure provision. This result is not observed for the rest of municipalities in Argentina, implying that different mechanisms might be in place in different regions of the country.

Keywords: Argentina, urban agglomerates, urban economics, land use regulation, growth controls, growth management, satellite imagery metrics, local government, regulatory regimes, public policy, urban development, zoning, land market regulation.